The television and cinema group Paramount Skydance presented a counter-offer for its competitor Warner Bros. on Monday. Discovery (WBD), valued at US$108.4 billion (nearly CA$150 billion), three days after the announcement of a buyout agreement between WBD and Netflix.
Unlike Netflix, which essentially only offers to buy the Warner Bros. studio. and the streaming platform HBO Max, Paramount Skydance wants to acquire all of WBDincluding its portfolio of television channels.
The public purchase offer (OPA), which runs until January 8, is made at $30 per share, or 77.9 billion US dollars (107.9 billion CA) in total, to which is added the debt, bringing the value of the company to 108.4 billion.
This bidding war was totally expected
commented, after the announcement, the co-CEO of Netflix Ted Sarandos during a conference organized by UBS Bank. We are super confident that we will lead [l’acquisition] eventually.
Netflix expected a counteroffer from another company.
Photo : AFP via Getty Images/Robert Sullivan
Investors reacted favorably to this new development, the stock WBD gaining 5.08% to $27.31 around 2:30 p.m. on the New York Stock Exchange. The Netflix stock was, however, penalized, dropping 3.31%.
Before considering a sale, Warner Bros. Discovery planned to split these channels, which include CNN and Discovery, from the rest of the group, estimating their lower growth potential in a context of erosion of cable television in the United States.
At least five purchase offers
Paramount Skydance was the first to express interest in Warner Bros. Discovery and submitted at least five offers, before Monday’s, but the council of WBD preferred Netflix, which also defeated the cable operator Comcast.
Our offer is the highest among those on the table
declared David Ellison, boss of Paramount Skydance, during an interview with CNBC.
That of Netflix valued Warner Bros and HBO Max at $83 billion (CA$114.7 billion), including debt.
Paramount is one of the dominant players in television and cinema in the United States.
Photo : Reuters / Kylie Cooper
In an attempt to convince the board of directors to WBD and its shareholders, Paramount Skydance is ready to finance its offer entirely in cash, while Netflix’s offer included a portion in shares.
The group managed to raise this colossal sum by relying, in part, on the assets of the Ellison family, the patriarch, Larry, being one of the richest men in the world, with a fortune estimated at 270 billion US dollars (373.2 billion CA$) by the magazine’s website. Forbes.
Paramount Skydance also plans to raise US$54 billion (C$74.8 billion) in debt, a considerable amount that would weigh on the combined entity’s balance sheet if the deal is successful.
We have more certainty of obtaining approval from regulators
than Netflix, argued David Ellison.
Trump has doubts about Netflix takeover
On Sunday, on the sidelines of a ceremony in Washington, Donald Trump expressed doubts about the advisability of a union between Netflix and Warner Bros. Netflix already has a very large market share
he recalled, which could be a problem
.
This merger would, in fact, bring together two of the three largest global paid video on demand platforms – excluding Amazon Prime, with the hybrid model –, i.e. more than 300 million subscribers for Netflix and 128 million for HBO Max.
Letting the world’s largest streaming service merge with the third is bad for competition
argued David Ellison. He has the advantage of having the ear of Donald Trump, who is close to his father Larry, who contributed financially to the American president’s electoral campaigns.
Among the partners of the project is also the investment company Affinity Partners, controlled by the son-in-law of the head of state, Jared Kushner.
The president’s interest is the same as ours, namely to create or preserve jobs
said Ted Sarandos on Monday, recalling that Paramount Skydance intended, if successful, to generate greater savings (5 billion US dollars or 6.9 billion CA$) than those promised by Netflix (2 to 3 billion US dollars or 2.8 to 4.2 billion CA$).
Where do you think these synergies will come from? asked the leader. Job cuts. We are not going to cut jobs. We are going to create some.
The boss of Skydance obtained, in July, the green light from the American telecoms and television regulator, the FCC, to acquire Paramount after promising a change in the editorial line of CBS, a Paramount group channel much criticized by Donald Trump.
